Investing Beyond Fear | Gold and silver will glitter, but equity demands discipline

History shows that patience through ‘time corrections’ transforms stagnation into strong gains

Global markets are navigating a phase where uncertainty has become a constant rather than an exception. Investors find themselves caught between the looming threat of the United States tariffs and sanctions, and the increasingly unpredictable diplomatic shifts emanating from Washington.

These global headwinds are further complicated by domestic pressures, including tepid earnings posted by companies for Q3 so far and the constant depreciation of the Indian Rupee compared to the US Dollar.

For retail investors, this environment naturally triggers difficult questions: Is it still sensible to invest in equities? Should one pivot towards safe-haven assets such as gold or silver? Or is it better to stay in cash, and wait for stability to return?

The key to surviving this volatility is not found in predicting the next geopolitical pivot, but in rigorous behaviour management, and an unwavering adherence to a proven and disciplined investment process.

Is now a good time to invest?

While the headlines may suggest that risk has increased, it is important to recognise that uncertainty has always been a part of investing. Every market cycle has had its own set of crises — wars, oil shocks, financial meltdowns, pandemics, or policy mistakes.

Equities, despite their volatility, remain fundamentally linked to economic growth and corporate earnings. For many, the most frustrating aspect of the current investing climate is the ‘time correction’ — a period where the returns from one’s portfolio remain flat or even dip into the low single digits, despite continued investment.

While this stagnation may feel discouraging, history provides a powerful lesson in the rewards of persistence. Between October 2010 and October 2013, the Indian equity market remained sluggish; a period during which the rupee depreciated by a staggering 38%! At the end of those three years, a large-cap SIP yielded a modest 9.39% XIRR. However, the investors who maintained their discipline for just one more year, saw those returns surge to 23.08% by October 2014.

This pattern was even more pronounced in the mid- and small-cap categories, where near-zero returns over three years transformed into gains exceeding 33% and 40%, respectively, after a fourth year of consistency. Historically, disciplined investing during volatile phases, rather than waiting for perfect conditions has played a crucial role in long-term wealth creation.

At the same time, the renewed interest in commodities, such as gold and silver, is understandable. These assets typically gain attention during periods of global stress, currency volatility, and inflation concerns. However, commodities should be viewed as portfolio stabilisers, rather than primary growth engines. Unlike equities, they do not generate earnings or compound capital over time. Allocating excessively to commodities in response to fear can lead to suboptimal outcomes, especially if prices have already risen sharply due to heightened risk aversion.

Equities, commodities, or cash?

Holding cash often feels like the safest option in uncertain times, but that safety can also be misleading. Cash protects against short-term volatility, yet it steadily loses purchasing power in an inflationary environment. Moreover, investors who frequently move entirely to cash struggle with re-entry. Fear tends to peak near market bottoms, while confidence returns after markets have already recovered. As a result, remaining fully in cash may reduce volatility, but it can also lead to missed opportunities and long-term underperformance.

Strategic patience

Current geopolitical tensions, including the rupee’s recent 10% depreciation, are not unprecedented events. While diplomatic tones may shift, ranging from India being hailed as an ‘essential partner’ to being threatened with trade wars, rational investors must take these developments with a pinch of salt.

The most effective strategy in such an environment is not aggressive repositioning, but staying aligned with one’s asset allocation as defined by a financial plan. Asset allocation exists precisely to navigate periods like these, ensuring that portfolios are neither overexposed to risk during euphoric phases, nor paralysed by fear during downturns. By periodically rebalancing rather than reacting, investors can systematically buy into underperforming assets and trim those that have run ahead of fundamentals. Coupled with a continued focus on improving one’s career or business income to grow investable surplus, this disciplined adherence to asset allocation transforms geopolitical uncertainty from a source of anxiety into a long-term advantage.

Ultimately, successful investing is about staying the course when others are panicking, ensuring that temporary market stagnation does not derail a well-structured financial journey.

Parimal Ade (X: @AdeParimal) is Founder, and Gaurav Jain (X: @gaurav28jain) is Co-Founder, Investyadnya.in.

(Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH).